Globalfoundries eyes IPO as ATIC sets expectations

MUNICH, Germany – Globalfoundries could stage an initial public offering (IPO) once the foundry chip manufacturer achieves profitability, according to Mike Noonen, Globalfoundries' executive vice president of worldwide marketing and sales.

Globalfoundries expects to be profitable by 2015, and not to require additional funding from its parent, Advanced Technology Investment Company (ATIC). The expectation was laid out in a press conference held by the two companies in Abu Dhabi that coincided with the one-year anniversary of Ajit Manocha's appointment as CEO of Globalfoundries in October 2011.

An IPO of shares would then be an option, Noonen told EE Times on the sidelines of the Electronica exhibition here this week. However, moving the company to profitability was the first order of business, he stressed.

An IPO could be used to raise funds for Globalfoundries (Milpitas, Calif.) as well providing the means for ATIC to reduce its ownership and get a return on its investment. Much would depend on how the IPO is structured.

Still unresolved is whether the Abu Dhabi government, which currently owns Globalfoundries through ATIC, remains committed to the construction of a wafer fab in Gulf state or whether the 2015 expectation signals that government officials might scale back the project. ATIC is owned by Mubadala Development Co., an investment vehicle of the Abu Dhabi government.

In May 2011, Globalfoundries was reportedly planning to spend as much as $8 billion building its next wafer fab in Abu Dhabi with groundbreaking to take place in 2012 and chip production scheduled to start in 2015. That plan was reportedly put on hold late in 2011, with a reassessment some time this year.

Mike Noonen, executive VP of Globalfoundries.

Noonen said this week that the foundry is making progress towards profitability with industry-leading annual sales growth.

Globalfoundries is ranked as fastest growing of the world's top 20 chip companies by IC Insights. The market researcher estimates that Globalfoundries grew from about $3.48 billion sales in 2011 to $4.56 billion in 2012, a 31 percent increase. That compares with 17 percent growth for market leader Taiwan Semiconductor Manufacturing Co., which recorded sales of about $17 billion in 2012, a $2.4 billion increase over 2011.

Globalfoundries is enjoying a boom year as a pure-play foundry supplying leading-edge silicon for mobile phones and tablet computers.

"The move towards profitability allows all sorts of options to open up," Noonen said. "One option would be to take the company public. Profitability gives us control of our own destiny." But he stressed that does not mean ATIC, Mubadala and Abu Dhabi would cut off additional funding. "There is additional capital spending planned for 2013," said Noonen.

Any insight into Deloitte's "Project Azalea" the not-so-secret site selection for another wafer fab in the Albany, NY area? I guess it's not for GloFo since their exist NY site should fit multiple fab and AbuDabi fab is next and on hold...

GlobalFoundries is a rare hit in the chip industry, as it should be with all the investments poured into it, and with the leadership it has nourished. Manocha made our list of EE Times 40th anniversary future innovators: http://www.nxtbook.com/nxtbooks/cmp/eetimes110512/#/50

@yalanland
I think the U.S. is the natural place for a technology company to list.
It is very hard to get an IPO away unless there is a good track record of profitability and good prospects going forward.
So, as Noonen said, the first thing is to be profitable.
It looks like Mubadla/ATIC is trying to set a realistic goal of profitable by 2015 -- otherwise why mention the date.
So I should say an IPO is unlikely much before then.
But if GF is profitable in 2013 and racks up several profitable quarters why not stage the IPO in 2014?